McGalla’s departure is effective immediately, the Foothill
Ranch, California-based company said in a statement. While the
board searches for a replacement, Chief Operating Officer Ken
Seipel and Chief Financial Officer Steve Benrubi will serve as
co-principal executive officers. McGalla joined Wet Seal in
January 2011 after 14 years at American Eagle Outfitters Inc.

Comparable-store sales in the current quarter are expected
to decline as much as 11 percent, the company said. So-called
same-store sales are a key benchmark for retailers’ growth
because closed and new stores are excluded. The second-quarter
loss will be as much as 7 cents a share before one-time costs
such as CEO severance costs, trailing a previous forecast of 3
cents to 6 cents.

Wet Seal declined 10 percent to $2.66 at the close in New
York for the biggest drop since Nov. 3. Shares have declined 18
percent this year.

“While respectful of the fact that the Board apparently
has a different vision for the direction of the company, I am
proud of what we have accomplished,” McGalla said in an e-mailed statement from spokeswoman Lisa Cohen. “Over the past
eleven months we have been executing on the turn-around plan
that we collectively developed.”

The retailer, which operates more than 550 stores in the
U.S. and Puerto Rico, increased sales 2.1 percent to $612
million in the 12 months through April 28. Profit declined 61
percent to $6.8 million in the same period.

Selling Company

The best way to maximize shareholder value is by putting
the retailer up for sale, according to Joseph De Perio, a senior
portfolio manager at Clinton Group, a Wet Seal investor that has
played activist in the past. De Perio, who wrote a letter to the
board today calling for a sale, said Clinton started investing
in Wet Seal two months ago and owns 4.3 percent of the company.

While Clinton wasn’t pleased with McGalla’s performance,
the board has shown they can’t run the company well, De Perio
said in a telephone interview. If Wet Seal isn’t put up for
sale, Clinton will file a proxy contest early next year to
replace the board and pursue its agenda, De Perio said.

“This board isn’t doing right by shareholders, and we plan
to change that,” De Perio said.